Fed’s next moves could seal the fate of tech stocks and small-caps
A rate cut isn’t expected in the coming week, but the Fed could signal if small-caps can keep up their winning streak
U.S. equities were extra jittery in the past week as investors navigated a sharp selloff in big-tech names and a rotation into small-cap and value stocks.
This movement from large to small has been one of the main market trends in July, enough to gain its own nickname — the “Great Rotation.”
The Russell 2000, RUT which tracks small-cap stocks, gained 10.2% over the past 12 trading days, as of market close on July 26.
It outperformed the S&P 500 by 13.3%, which was its largest 12-day outperformance of the S&P 500 of all time, according to Dow Jones Market Data.
Meanwhile, it outperformed the Nasdaq Composite by 17.1%, its second largest 12-day outperformance of the Nasdaq.
On Friday, the Russell 2000 logged a 3.5% weekly gain, trouncing the performance of the thee big equity indexes.
We’re seeing a big rotation out of the AI names, out of large-cap growth stocks, out of tech stocks, and moving into value stocks and going down in capitalization to small-caps.”
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